Mutual funds rebound on sluggish late 2018

Turbulence in the world economy which has caused declines in investments managed by Fortress Fund Managers in the last quarter of 2018 has been offset by a strong start to 2019.

This mixed assessment is contained in Fortress’ December 2018 Quarterly Report which was recently shared with investors. Fortress attributes the 2018 falloff to “one of (the) swiftest drops in years” in global markets.

Fortress, which manages more than $650 million across 11 different funds with regional and global investments, is declaring that the decline in global markets and
corresponding lower prices presented an opportunity to diversify its investments with a greater potential for higher future gains.

Fortress said: “With excellent value across our global equity investments, we are more constructive on future returns now then we have been in quite some time.”

The December quarterly report focuses on the performance of the fund managers’ three main products: the Caribbean Growth Fund, the Caribbean High Interest Fund and the Caribbean Pension Fund.

The Caribbean Growth Fund saw a decline of 6.6 per cent for the fourth quarter of 2018 and four per cent over the past year. The mutual fund’s net asset value per share at year-end stood at $5.6868, with the fund’s net assets at $447 million – a decline of $7 million from the previous year.

On the Caribbean side, holdings had mixed results as some consolidation took place among regional financial companies.

And the fund managers are optimistic about the impact of Barbados’ equalization of the tax rates between domestic and international business companies.

The report noted: “The huge reductions in Barbados corporate tax rates, however, should be a long-term positive influence on stock markets, increasing company earnings and making the Caribbean jurisdiction more desirable for regional companies.

“Global stocks sold off sharply, bringing share prices to far more attractive levels. As a result the fund added steadily to investments on sale.”

The Caribbean High Interest Fund, which concentrates on income preservation, recorded a small decline for the fourth quarter of 0.5 per cent and two per cent over the past year. The net asset value of the Fund’s Accumulation share finished the year at $1.9278 per share while the Distribution share finished at $0.9832 per share. Despite this decline, the net assets of the fund were $132 million, up from $129 million year on year.

Fortress said: “While a negative return is never cause for celebration, we are pleased the fund preserved its value over a very difficult year for bond investors in Barbados and globally.”

The report also took note of the Government’s domestic bond restructuring process which was completed during the fourth quarter – leading to “losses for many bondholders, in some cases significant ones, but it has given the government a much-needed ease in interest and principal payments as it restructures its finances”.

The three classes of shares of the Caribbean Pension Fund declined between 1.3 per cent and 5.2 per cent in the fourth quarter, with a decline between 2.2 per cent and 3.7 per cent over the past year.

The report said: “Stocks fell in the fourth quarter while bond prices were little changed. Global financial markets continue to grapple with rising interest rates and trade tensions.”

Declaring that pensions continue to be an attractive savings route, Fortress repeated its call for the reinstatement of tax allowances for individual pension contributions.

The fund managers said: “We hope this will be done soon to remove the double taxation of Barbadian retirement savings.”

Fortress is to reveal more of its past performance and future directions during its ninth yearly investment forum on March 7 at the Frank Collymore Hall.